May 21

How Are Property Taxes Determined in Ottawa? Everything You Need to Know

Paying property taxes in Ottawa is an unavoidable part of owning a home, with these payments funding important municipal services and local infrastructure development. Every homeowner should know how to determine property taxes and navigate through the taxation process—luckily, the Chris Allard team is here to help you understand your tax obligations and make the process as stress-free as possible. 

In this article, we are going to cover how to calculate real estate taxes, what Ottawa’s property tax rate is, and what to do if you disagree with your property assessment. Let’s get started!

What Are Property Taxes?

Property tax is a levy based on the assessed value of a property, typically determined by the local or municipal government. Unlike income or sales taxes, property taxes are based solely on homeownership and are not related to your earnings or spending. The higher the value of the real estate you own, the higher the property taxes you must pay.

These taxes are set by the government at the municipal level and are used to fund various city services that benefit residents. In addition to the municipal portion, local governments also collect education taxes on behalf of the provincial government to fund local schools and related activities.

Municipal Services Covered by Property Taxes

• Transportation. Property tax revenues are used to fund the maintenance and improvement of the city’s roads, public transit, and cycling infrastructure.

• Waste management. Property taxes also help to fund waste collection and recycling programs within the city’s bounds.

• Public safety. Revenues from property taxes help fund public safety and security organizations, including police and fire services.

• Parks and recreation. Property taxes in Ottawa help maintain local parks, community centres, and other recreational facilities, enriching the lives of city residents.

• Libraries and cultural services. Property tax revenues also support Ottawa’s libraries and cultural programs, helping to fund public libraries, community arts initiatives, local museums, and cultural events.

• Education. The education portion of your property tax bill goes directly toward supporting local school boards, including teacher salaries, classroom resources, school building maintenance, and student services.

Components of Property Taxes in Ottawa

Property taxes in Ottawa are calculated based on the assessed value of the property and the city’s tax rate. 

Assessment Value of Property

The property tax amount you are obligated to pay largely depends on the value of your property. As such, the Municipal Property Assessment Corporation (MPAC) assesses the value of properties every four years or if certain types of changes occur on a property, such as new construction or a change in ownership. When assessing the property, the MPAC considers factors such as location, size, features, and comparable sales data. You will receive an updated assessment notice following the change.

Please note: The assessed value by MPAC for property taxes often does not reflect the home’s fair market value. Instead, the fair market value is typically more than the assessed value for the property taxes.

Ottawa Property Tax Rate

The City of Ottawa has the authority to apply different tax rates to various property classes, meaning that tax burdens will differ depending on the property class. 

The residential class tax rate is a base ratio of 1.0. If another class of property has a tax ratio of 2, for example, its property tax would be twice as high as the tax for a similarly valued residential property.

Tax ratios for property classes may change each year and can be found on the City of Ottawa’s website. Changing property tax rates allows municipalities to offset shifts in property tax burdens between classes and keep the tax burden the same for each class.

Education Taxes

Property taxes comprise two portions: municipal taxes and education taxes, which are collected by the municipality on behalf of the provincial government. The education portion of the tax is determined by the assessed value of the property and the education tax rate, which is set by the Province of Ontario. The education tax rate is adjusted annually and is set based on general provincial reassessment changes by class.

How Property Values Are Assessed

In Ontario, property values are assessed by the MPAC, which is an independent, not-for-profit organization funded by all municipalities in the province. When determining property values, the MPAC uses a method called the Current Value Assessment (CVA). The technique estimates what your property would sell for on the open market as of a specific date, usually January 1st of a given year. 

Property assessments are based on several key factors that can influence market value, including:

• Location of the property and proximity to schools, amenities, and transit
• Size of the home and lot
• Age and condition of the structure
• Type of property (e.g., residential, commercial, multi-unit)
• Renovations or upgrades that may increase property value
• Comparable sales in the neighbourhood

The Municipal Property Assessment Corporation updates property valuations every four years or if there are any significant changes to a property, such as construction or a change in ownership. Between formal reassessments, your property’s value is considered to remain the same. When a reassessment does occur, any decreases to your property taxes will be applied immediately, while increases will be phased in gradually over four years.

Calculating Property Taxes in Ottawa

Your property tax in Ottawa comprises two parts: the municipal tax and the education tax.

The municipal property tax can be calculated by multiplying the assessed property value by the municipal property tax rate, which is set annually by the City of Ottawa. The education component is calculated by multiplying the assessed property value by the education tax rate set by the Minister of Finance, the provincial government.

Property Tax = Municipal Tax + Education Tax

where

Municipal Tax = Assessed Value x Property Class Tax Rate

Education Tax = Assessed Value x Education Tax Rate

How to Determine Property Tax: Example

For example, if your property is assessed at $500,000, and the property class tax rate is 1.0%, your municipal tax portion would be $5,000 per year. If the education tax rate is set to 0.153% for the year, the education tax portion of your property tax would be $765. The total property tax you would be required to pay would, therefore, be $5,765.

Factors That Influence Property Tax Rates

Property tax rates are determined each year by the municipal government based on a variety of local and economic factors.

City of Ottawa Budget Needs

The City of Ottawa must fund essential municipal services like emergency response, road maintenance, public transit, and parks and recreation. Every year, these needs evolve, with some projects being completed and some planned to begin in the near future. To fund these activities, the City uses property taxes, meaning that the tax rate is bound to change depending on the total amount of revenue required for the following year.

New Local Developments and Infrastructure

While new local developments and infrastructure require additional funding, once they are completed, these types of projects increase the city’s tax base. This means that the increased short-term funding needs may temporarily increase local tax rates, while stabilizing them in the long run.

Market Trends and Property Re-Assessments

Market trends and property reassessments may also affect individual tax bills. If your property increases in value faster than the average in your area due to renovations, rising demand, or local improvements, your share of the overall tax burden may increase, even if the tax rate itself stays the same. On the other hand, if your property’s value rises more slowly than others, your tax bill may decrease relative to others in Ottawa.

Programs and Rebates for Ottawa Homeowners

Property taxes can be a significant portion of a family’s annual expenses. Luckily, the City of Ottawa offers several tax relief and deferral programs for eligible individuals.

Ontario Energy Property Tax Credit

The Ontario Energy Property Tax Credit helps offset the cost of property taxes, providing annual financial relief to low- to moderate-income homeowners. It is part of the Ontario Trillium Benefit and is administered through the personal income tax return process.

Eligibility for the tax credit is based on income, age, and property tax paid, with the maximum credit amounts adjusted annually for inflation. Seniors, individuals with disabilities, and families with children may be eligible for higher credit amounts.

Property Tax Deferral Program for Seniors and Persons with Disabilities 

The City of Ottawa offers two property tax deferral programs: one for seniors and one for persons with disabilities. Under these programs, the City allows eligible homeowners to defer full payment of annual property taxes at a reduced interest rate until they sell or transfer their property.

Registered Charitable Organization Rebates

Registered charities and qualifying non-profit organizations may receive property tax rebates if they use their properties for eligible purposes. Under the program, qualifying organizations occupying commercial or industrial properties can receive a rebate on their property taxes of up to 40% to help reduce operational costs and support their continued delivery of community services.

How to Appeal Your Property’s Assessed Value

If you believe that your property’s most recent assessment is unfairly high or inaccurate, you have the option to submit an appeal. Keep in mind that there are specific deadlines and procedures you need to follow to appeal the assessment; you will also need to provide evidence to support a lower valuation.

You can begin by reviewing your Property Assessment Notice and accessing your property details through AboutMyProperty.ca. Through this platform, you can compare your home to similar properties in your area and see how your assessment was calculated. If you still disagree, you can file a free Request for Reconsideration (RFR) with MPAC, which must be submitted by March 31st of the year following the notice. If you are not satisfied with MPAC’s reconsideration outcome, you can further escalate the matter by filing an appeal with the Assessment Review Board (ARB), which will make the final decision on your assessment.

Tips for Managing and Planning for Property Taxes

To manage your property taxes more effectively, make them a non-negotiable part of your annual household budget. Monitor yearly tax rate changes so you can adjust your finances accordingly and avoid any surprises. In Ottawa, you have several payment options to help stay organized and avoid late fees. 

1. Pay your property tax bills as they come, typically twice per year. (My ServiceOttawa Portal)
2. Enroll in the City of Ottawa’s pre-authorized payment plan. This plan allows for automatic withdrawals either on a 10-month schedule or twice yearly, helping you spread payments evenly and stay on track. 
3. Alternatively, many mortgage lenders offer to manage your property tax payments for you by collecting a portion each month—e.g., $200 monthly for $2,400 in annual taxes—and remitting it to the city on your behalf. While this service may come with a fee, no interest is charged or accrued. 

Choosing the option that best suits your budgeting style can make managing your property taxes more predictable and stress-free.

Reach Out to the Chris Allard Team for Personalized Advice

While the value of your property is only reassessed every few years, the tax rates fluctuate each year, meaning that your property tax will change from year to year. Keep an eye on local tax policies to avoid any surprises during the tax season.

Connect with our team to learn more about property taxes and how they impact your mortgage.

Common Questions About Property Taxes in Ottawa

Can property taxes be reduced?

Yes, property taxes can be reduced in some situations. If you feel like your MPAC property assessment is too high, you may file a Request for Reconsideration (RFR) to challenge the assessed value. The City of Ottawa also offers various rebates and deferral programs to reduce the property tax burden for eligible individuals.

What happens if you don’t pay property taxes?

If you don’t pay property taxes by the due dates, interest and penalty charges will begin to accumulate on the owed amount. Ongoing non-payment can lead to the City placing a lien on your property or selling the property to recover the unpaid balance. To avoid unpaid property taxes, you can fill out the City of Ottawa PAD to ensure they are always paid in full and on time.

How are taxes affected by renovations or additions to a property?

Major upgrades, such as home additions, a finished basement, or kitchen or bathroom remodels, can increase the value or size of your property, leading to a higher assessed value by the MPAC and higher property taxes. Minor cosmetic changes will not affect the assessment.

Chris Allard

Chris Allard’s experience in the field means he can get you offers with over 50 financial institutions lending in Ottawa. Every lender has many mortgage products they offer, which means Chris and his team will make sure a mortgage caters to your needs while also ensuring you get a competitive rate. Chris Allard is a proud mortgage broker of Smart Debt Mortgages, independently owned and operated. Smart Debt broker #12236.